We are approaching the 20th anniversary of Ian Ayres’ and John Braithwaite’s 1992 book, Responsive Regulation. This paper, which was prepared for a September 2010 workshop at UBC, considers the implications of the recent financial crisis for Ayres’ and Braithwaite’s concept of “enforced self-regulation.” Its main thesis is that flexible and iterative regulatory strategies, such as enforced self-regulation and its progeny, are more porous to influence from different planes of action than prescriptive regulation would be. When focusing on technical regulatory design strategies, scholars should therefore be cautious about bracketing or underestimating the problem of power operating at the “macro level” of political and economic influence. In the context of financial regulation, this background power framework contributed to an under-ambitious regulatory agenda framed around the inevitability of complexity, the clear value of innovation, and the need to minimize the regulatory burden. Also, at the “micro” plane of implementation, the content of regulatory principles was poorly specified because of the lack of a robust regulatory presence, pervasive (and predictable) over-optimism, and an excessive reliance on computer modeling and code to assess risk and compliance. The paper argues that considerable regulatory autonomy and internal analytical capacity is required to make the precise form that flexible regulation takes reflect actual regulatory intention, rather than the influence of these “macro” and “micro” level forces. Among the various contemporary forms of flexible regulation, only meta-regulation – an approach that includes the updated version of Responsive Regulation, as articulated by John Braithwaite in a new article to be published in this volume – has been designed with this kind of systematic learning at the core of its regulatory project
